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March 29, 2008

Clinton Details Premium Cap in Health Plan

Senator Hillary Rodham Clinton said in an interview on Wednesday that if elected president she would push for a universal health care plan that would limit what Americans pay for health insurance to no more than 10 percent of their income, a significant reduction for some families.

In an extensive interview on health policy, Mrs. Clinton said she would like to cap health insurance premiums at 5 percent to 10 percent of income.

The average cost of a family policy bought by an individual in 2006 and 2007 was $5,799, or 10 percent of the median family income of $58,526, according to America’s Health Insurance Plans, a trade group. Some policies cost up to $9,201, or 16 percent of median income.

The average out-of-pocket cost for workers who buy family policies through their employers is lower, $3,281, or 6 percent of median income, according to the Kaiser Family Foundation, a health research group.

A cap on premiums has been part of Mrs. Clinton’s universal coverage proposal since she announced it in September. Her published plan did not disclose her thinking on where to place the cap. She also said in the interview that she preferred to set the limit at a single level for all Americans rather than varying it by income.

Mrs. Clinton, a New York Democrat, set out a comprehensive approach to her signature issue of health care in three speeches last year, but she has been criticized for not providing details on several crucial components. She largely continued that approach in the interview, saying she would leave particulars like the eligibility criteria for her proposed health insurance tax credits to negotiations with Congress.

March 25, 2008

Must you buy health insurance?

An important element is being overlooked in the healthcare debate between the Democratic presidential candidates: namely, whether the plans they propose are constitutional.

The largest difference between their healthcare plans is that Sen. Hillary Rodham Clinton would "mandate" that everyone (with limited exceptions) purchase private health insurance. Although Sen. Barack Obama's plan also contains a mandate, it is much narrower – it is required only for children. Mr. Obama relies principally on subsidies, economies of scale, and regulation to achieve his version of universal coverage.

Are health insurance mandates constitutional? They are certainly unprecedented. The federal government does not ordinarily require Americans to purchase particular goods or services from private parties.

The closest we come is when government imposes a condition on the grant of discretionary benefit or permit. For instance, in most states, you must have auto insurance to drive a car, or you are required to install fire sprinklers when building a new house. But in such cases, the "mandate" is discretionary – you don't have to drive a car or build a house. Nor do you have a constitutional right to do so.

But Americans do have a constitutional right to live in the United States. Accordingly, neither federal nor state governments can require you to purchase health insurance as a "condition" for residency. The Supreme Court has drawn a distinction between requirements that are flat-out imposed by government and those imposed as a condition for discretionary benefits.

The health insurance mandate proposed by Clinton is similar to the one enacted in Massachusetts under former Gov. Mitt Romney and the plan proposed by Gov. Arnold Schwarzenegger for California. These "unfunded mandates" are unlike any form of government regulation we've seen.

In making the case for her plan to mandate private health insurance, Clinton said in a recent Democratic debate that not doing so "would be as though Franklin Roosevelt said, 'Let's make Social Security voluntary,' or if President [Lyndon] Johnson said, 'Let's make Medicare voluntary.' "

In fact, under the law, there's a big difference between participation in a government health program funded by taxes and privatizing such a program, with individuals forced to purchase private health insurance.

March 23, 2008

Report: Health insurance a matter of life or death

Each day, local newspapers run obituaries of Iowans who have died. Causes of death range from cancer to car accidents. It's unlikely anyone recalls seeing "lack of health insurance" as a reason for death.

However, about three obituaries each week should list that cause, according to a new report from Families USA, a national organization for health-care consumers. Nearly three Iowans die each week in part because they don't have health insurance, the report found. Many have serious illnesses that could have been treated effectively if detected earlier.

"The conclusions are sadly clear - a lack of health coverage is a matter of life and death for many Iowans," said executive director Ron Pollack.

This is relevant information as the lawmakers consider health reforms. Much of the conversation at the Statehouse is centered on insuring children - a less costly and easier group to cover because many are eligible for government programs.

It's a reminder that health reform must address coverage for this demographic of Americans. Unlike children and seniors, they frequently aren't eligible for government health insurance unless they're poor or disabled. Private health insurance may not be offered through an employer or is unaffordable.

Adkins recently changed his Web site, posting what he charges for everything from office visits to lab work. For example, an initial office visit can run from $75-$100 or $125, while lab work varies from $8 for a glucose blood test to $100 for the human papilloma virus.

His move is part of a national push toward greater transparency in health care, as more Americans go without health insurance and there's expected to be an increase in people moving to high-deductible health plans that force them to consider the cost of services.

Thirty-three states, including California, Florida, and Michigan, have laws that require price transparency, according to the Deloitte Center for Health Solutions. Some medical and policy experts believe greater transparency will lower care costs.

"What triggered it with me is when I started seeing everyone laid off," Adkins said.

Nationally, 47 million Americans are without insurance, according to industry reports. The figure is likely to grow as the economy slides. Fearing the cost of care, many who are uninsured won't seek help until their conditions land them in emergency rooms.

Adkins then started considering the number of Americans who are expected to move into consumer-driven health plans: high deductible, low-premium products that are generally linked to a medical savings account or reimbursement agreement. Twenty-four million Americans were enrolled in consumer-driven plans as of January 2006, according to the Government Accountability Office, the latest data available.

March 14, 2008

The Next Failure of Health Care Reform

A major problem -- if not the major problem -- for many people living in the U.S. is the difficulty of accessing and paying for medical care when they are sick. For this reason, candidates in the presidential primaries of 2008 -- the Democrats more often than the Republicans -- have been recounting stories about the health-related tragedies they have encountered in meetings with ordinary people around the country (an exercise conducted in the U.S. every four years, at presidential election time). These stories tell of the enormous difficulties and suffering faced by many people in their attempts to get the medical care they need. I have been around long enough -- I was senior health advisor to Jesse Jackson in the Democratic primaries of 1984 and 1988 -- to know how frequently Democratic candidates, over the years, have referred to such cases. The only things that change are the names and faces in these human tragedies. Otherwise, the stories, year after year, are almost the same.

In the Democratic Party primaries of 1988, for example, candidate Michael Dukakis talked about a young single mother who had two jobs and still could not afford medical insurance for herself and her children. In 1992, Bill Clinton did the same, changing the story only slightly. This time it was the case of a woman with diabetes who could not get health insurance because of her chronic condition. And now, in the 2008 primaries, Hillary Rodham Clinton (whom I worked with on the White House Health Care Reform Task Force in 1993) describes a similar case. This time it is a single woman, with two daughters, who cannot pay her medical bills because her congenital heart defect makes it impossible for her to get medical insurance coverage. And Barack Obama describes similar cases, with the eloquence that characterizes all of his speeches. He frequently refers to his own mother, who had cancer and had to worry not only about her illness but about paying her medical bills.

All these cases are tragic and are representative of a situation faced by millions of people in the U.S. every year. But, I am afraid that unless the winning Democratic candidate, once elected president (and I hope he or she will be), develops a more comprehensive health care proposal than any of those put forward in the primaries so far, we will see the same situation continue. Democratic candidates in the 2012 primaries, and in the 2016 primaries, will still be referring to single mothers with chronic health conditions who cannot pay their medical bills. The proposals put forward by Obama and Clinton underestimate the gravity of the problem in the U.S. medical care sector. The situation is bad and is getting worse: the number of people who are uninsured and underinsured has been growing since 1978.

March 13, 2008

Vertical health destination and search engine Healthline has teamed up with US health insurance carrier Aetna to offer what the company is calling Aetna SmartSource -- customized health search. The service, powered by Healthline, will roll out on Aetna’s member self-service website and offer personalized search results based on individual health records and profiles. That means that two different Aetna customers searching for "diabetes type II" will see potentially different results based on their individual health histories.

What's different about this vs. what Microsoft, Google and Revolution Health are doing is that it's all taking place within the context of the existing relationship between insurance provider and customer-patient. Aetna already has the health records and histories of its insureds so there's little or no effort for the users to obtain the benefits (so to speak) of the system. In other words, they don't have to construct detailed profiles or upload information themselves.

What's also interesting is that this is the most developed version of personalized search yet in the market. In the relatively protected context of the existing carrier-insured relationship most of the concerns about tracking and data-mining go away. Aetna won't be using search behavior on its site, presumably, to advertise or market products to its customers.

However, in a cautionary tale about corruption in the US healthcare industry, one of Aetna's competitors in California, HealthNet, had a secret practice of canceling policy holders who were perceived as "expensive" in order to save the company money. It actually tied employee bonuses to the number of customer cancellations they accomplished.

March 11, 2008

Calif. Insurance Rulings GCs Should Watch Out For

California appellate courts tackled a diverse array of insurance issues in 2007 that included health care post-claim underwriting, directors and officers (D&O) liability, employee dishonesty and the scope of the attorney-client privilege in the context of insurance. The decisions in these cases will have a direct influence on business processes for companies across many industries, and California general counsel should be aware of how these rulings may affect their companies.

-Health care. In suits that could have an impact on health insurance claims brought by employees, two recent court of appeal decisions held that "post-claim underwriting" by insurers was a prohibited practice. In Ticconi v. Blue Shield of California Life & Health Ins. Co., 157 Cal.App.4th 707, the 2nd District Court of Appeal held that post-claim underwriting of disability insurance policies is prohibited by Insurance Code §10384. The court allowed a case to proceed where it was alleged that the unlawful conduct was post-claims underwriting in which the insurer rescinded disability insurance policies based on alleged misrepresentations in the applications. The applications were incorporated by reference in, but neither endorsed on nor attached to, the insureds' policies, in violation of Insurance Code §10113 and §10381.5.

Also, the 4th District, in Hailey v. California Physicians' Service, 158 Cal.App.4th 452, concluded that Health & Safety Code §1389.3 precludes a health services plan from rescinding a health insurance policy for a material misrepresentation or omission unless the plan can demonstrate that the misrepresentation or omission was willful or that the plan had made reasonable efforts to ensure that the subscriber's application was accurate and complete as part of the pre-contract underwriting process. The court found that an insurer cannot engage in post-claim underwriting and, given the likelihood of inadvertent error in the application process, required an accurate risk assessment by the health insurance plan, which requires a reasonable check on the information the insurer uses to evaluate the risk at the time of the application.

March 08, 2008

Could Your Health Insurance Be Revoked When You Need It Most?

A series of troubling developments in California's individual health insurance market is bringing national attention to the problem of patients having their coverage taken away when they need it most.

Last month, an arbitration judge ordered California-based health insurer Health Net Inc. to pay $9 million to a cancer patient whose individual coverage was canceled during her chemotherapy treatments in 2004. The judge ordered Health Net to repay $129,000 worth of Patsy Bates' unpaid medical bills and awarded the 52-year-old hairdresser $8.4 million in punitive damages and $750,000 for emotional distress.

It's not just Health Net that's attracting scrutiny. Blue Cross of California, a unit of WellPoint, the nation's largest private health insurer, drew fire recently for sending letters to doctors asking them to verify patients' accounts of their health histories in their applications after the company already had approved their policies. Blue Cross has since stopped the letter campaign.

California's Department of Managed Health Care, which regulates the state's HMO plans, has been investigating consumer complaints about unfair rescissions since 2006. The agency has fined both Blue Cross and Health Net and is in the process of reviewing the practices of other companies that sell individual policies in the state, spokeswoman Lynne Randolph said.

"We don't think it is only happening in California...but California's farther ahead in terms of enforcement," she said. "We had a statute in place that companies must do underwriting up front and a consumer must willfully misrepresent their health condition on an application in order for a company to rescind. We feel that means it can't just be an inadvertent omission."

Insurers say they have a responsibility to ensure applicants are truthful about any preexisting conditions they may have so companies can accurately price policies and hold down costs for all their members. But consumer groups warn that tactics such as tying financial incentives to the number of rescissions an employee makes or involving doctors in investigations after policies have been issued aren't working and may be illegal in some states.

March 06, 2008

Taking the LAO in Context on California Health Reform

THE LAO'S INFLUENCE: While some have seen the LAO report as a factor in the stalling of AB x1 1 and the California health reform this year, I think the evidence shows that it was the easy excuse--rather than the actual reason--for the Senate to stop the bill. (For example, one Senator said that the LAO report was determinative in deciding how to vote, even though that Senator had announced opposition to the proposal months earlier.)

In other words, the LAO report, along with other factors, helped create an environment where a "no" vote was acceptable and even easy. The LAO has no formal decision-making power, but it does have influence, and its decisions do have political consequences.

PLACING REFORM AT A DISADVANTAGE: But the issue as we look forward is the approach used by the LAO, and the context of how that report is used by legislators. Health Access put out a full analysis of the LAO's take on AB x1 1. Basically, the LAO gave a report on AB x1 1 that indicated that the plan could pencil out for about five years, but that also:

• indicated and quantified all the costs and potential risks, but did little to put those risks in context, to indicate how real those risks were (which ended up overstating several risks);

• did not quantify a single cent of savings or upside potential;

• did not evaluate the risks of the status quo, or propose alternatives to the proposal.

To be fair, the LAO had very little time for its analysis, and many analysts are more oriented to warning you about potential risks than potential benefits.

But that's when it is important for the Legislature to place such a report in context. Legislators routinely pick-and-choose what they like and do not like about the LAO says about the budget and other policy proposals, and this should have been no exception. The Legislature should have placed this LAO analysis alongside the voluminous analyses done by various independent experts throughout the year.

WHY DOES THIS MATTER? This matters for the future of health reform. Under the approach used by the LAO, given the certainty that some legislators seemed to seek, then no health reform would ever pass in California.

Budgets fluctuate over time: if legislators seek certainty that health care will be adequately funded in perpetuity, then health reform is not possible. This is not a standard that is met in Canada or Great Britain, or indeed in Medicare or Medicaid. The LAO failed to book a single cent of savings, even though we have ample evidence that the power of group purchasing is effective, both in public and private health care purchasing.

March 02, 2008

Cutting Off California Health Insurance?

Comprehensive healthcare reform has failed in California. But that doesn't mean health insurance companies will, or should, escape scrutiny from state officials.

As reporter Lisa Girion has ably chronicled in this newspaper, insurance companies frequently revoke patient coverage -- a practice known as rescission -- under questionable circumstances. Girion has written, for example, of cancer patients who have lost their insurance in the middle of courses of chemotherapy. Recently she reported that Blue Cross of California mailed copies of health insurance applications to doctors, asking them to check for preexisting conditions that might be used to cancel their patients' policies -- a strategy that, even if legal, violates the spirit of doctor-patient privilege. Not to mention, possibly, the Hippocratic Oath.

In response to troubling tales such as these, California officials are cracking down on insurance companies. Insurance Commissioner Steve Poizner is investigating gaps in PacifiCare's claims process that resulted in more than 100,000 violations of state law. Los Angeles City Atty. Rocky Delgadillo has set up an investigative team to examine rescissions, and has created a website soliciting reports of unfair denials of care. Assemblymen Hector De La Torre (D-South Gate) and Ted Lieu (D-Torrance) have sponsored bills designed to curb egregious rescissions. Those are worthy undertakings and good bills.

Insurance companies are not always villains. To function, they must be able to assess risk and price policies appropriately. Patients who buy individual policies do not deserve a get-out-of-jail free card that lets them lie on their insurance applications. Sometimes, services will be denied. But the vast majority of patients, who are honest, don't deserve a system that is stacked against them, with underwriting practices that make insurance unaffordable even as companies' profits rise. Some patients have become reluctant to use their insurance for treatment or medication because they fear rate hikes. Certainly, spending thousands of dollars in yearly premiums for individual policies, many with high deductibles and co-pays to boot, should buy better "coverage" than that.

We hope, as officials pay closer attention to health insurance practices, to broaden the debate. How might we regulate insurers to assure that risk management doesn't price vast numbers of people out of coverage? How can we ensure that potential price increases don't scare off essentially healthy patients from seeking necessary -- and ultimately cost-saving -- non-emergency care? What is a reasonable profit for an insurance company? And if such a profit is impossible to attain without forcing catastrophic costs on patients, what then?